First-of-Its-Kind Advancement Proceeding Before Delaware Chancery Magistrate Ends in HSW Win for Terminated CEO

July 30, 2025

Advancement and indemnification provisions are standard features negotiated in executive employment agreements and contained in corporate by-laws. These clauses obligate employers to defend executives who face litigation as a result of their employment and to advance their legal costs. Unsurprisingly, some employers seek to avoid their obligations.

In a matter led by partner Evan W. Bolla, Harris St. Laurent & Wechsler secured the advancement of litigation costs for a terminated CEO who was sued by his former employer. The case marked the Delaware Chancery Court’s first-ever summary proceeding in an advancement dispute to be heard by a magistrate.

The dispute arose when Kayser-Roth Corp. terminated Nicola Gallotti after six years as its CEO after he sought to enforce compensation promises. Kayser-Roth alleged that Gallotti’s termination was for Cause under the terms of Gallotti’s employment agreement. In a letter to the company, HSW partner Todd Gutfleisch challenged Kayser-Roth’s assertion that the termination was for cause and that it therefore could deny him severance. After attempts to resolve the situation failed, Kayser-Roth filed a lawsuit against Gallotti.

The employment agreement Gutfleisch had negotiated for Gallotti, as well as the company’s by-laws, entitled him to advancement and indemnification for any litigation related to his work for Kayser-Roth. HSW sent a demand to Kayser-Roth for advancement and, when it did not comply, filed suit in Delaware Chancery Court.

The court’s subsequent ruling found Gallotti was entitled to advancement under both his employment agreement and Kayser-Roth’s corporate bylaws.

In addition to Bolla and Gutfleisch, the HSW team included associate Arshiya Sharda, as well as local Delaware counsel David Felice of Bailey Glasser.